A logical question is how to choose those attributes or in other words, how to position a brand.
Segment the market
Each person has different needs; a product that tries to meet all these needs will end up being “all for no one”. For this reason, the first step in positioning a brand is to identify the existing segments of the market and then select the most attractive one.
Segmentation consists of grouping potential consumers into groups that clearly differ from each other but show a certain degree of homogeneity within the group. In other words, it is about identifying consumers who have similar preferences to each other, grouping them into a group with preferences that are sufficiently different from other groups.
This grouping of consumers can be done on the basis of different methodologies:
– Socio-demographic: it is an indirect method that assumes that the origin of preferences is given by profiles such as sex, age, income, education, location, etc.
– Attributes sought: this is a methodology that emphasizes consumer value systems, as two people of the same demographic profile may have very different preferences. For example, a U.S. study* in the U.S. divided watch buyers into 3 segments according to the attributes sought: `economy’ (23% of buyers looking for the cheapest watch that works reasonably well), `duration and quality’ (46% looking for a handcrafted watch with a painstaking design and long life), `symbolism’ (31% looking for a watch with aesthetic or emotional values, usually associated with high status and price).
In the same study, it was found that the most expensive watches were bought by both high-income and low-income people seeking to show a higher status, while some people with very high incomes preferred not to buy very expensive watches and opted for watches of’duration and quality’. This was a surprise to some prestigious brands that focused exclusively on very high-income consumers and distributed their products exclusively in jewelry stores.
– Behavioural: it determines the segments based on the purchasing behaviour of people; for this purpose it can choose characteristics such as the purchase history (potential users, first users, regulatory users, etc.), the consumption rate of the product or service (20% of the consumers who generate 80% of the business or those consumers above the average average consumption rate), and the degree of loyalty (occasional consumers, habitual consumers, etc.).
– Psychographic: this methodology, also called’lifestyles’, seeks to identify and group consumers based on their similarity in values, attitudes, interests, and opinions. Thus it seeks to identify similar personality indicators that also correlate with purchasing decisions. For example, in the USA, the Stanford Research Institute studied the American population and defined 8 segments, including’experimenters’ (young, enthusiastic and impulsive people who are motivated by self-esteem and self-expression, thus seeking variety and excitement in their consumption, valuing the new and the risky) or’winners’ (people motivated by achievement, with a high focus on specific family and work objectives, with respect for authority and status-quo).
From a positioning point of view, a segmentation is especially useful if the different groups are correlated with specific benefits or attributes. For example, in the car category, a demographic segmentation that separates young single people and middle-aged people with children into groups may be relevant, as both groups have very different needs and can look for products with clearly defined attributes: high-end sports models vs. large models with high levels of safety.
Segmentation typically begins with market research, where the variables that characterize each consumer are identified (according to the chosen methodology) and then grouped together based on similar characteristics. This is done using techniques such as conjoint’ analysis (to identify consumer needs and the relative importance of each), multi-dimensional analysis (to group those consumers into clusters) and discriminant analysis (to determine the demographic characteristics of those segments or clusters).